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Merchant commerce platform Pine Labs on Thursday announced it is acquiring Bengaluru-based application programming interface (API) fintech startup Setu for an undisclosed sum.

Setu's APIs are being used across industry verticals, including startups, retail enterprises, banks, insurance and lending companies - from Aadhaar eSign to BBPS bill payment, payment collection integration via WhatsApp, FASTag payment collection and more.

"Embedded financial services and open banking are going to be the way forward and the embedded finance market value is expected to exceed $138 billion by 2026 as APIs are intensifying the competitive fintech landscape," said B Amrish Rau, CEO, Pine Labs.

"We are in the golden phase of digitisation in India, and Setu is a pioneer in supporting innovation on the India stack - their work on UPI and in the account aggregator space is moving the industry forward," Rau added.

Setu works with account aggregator partners which are non-banking financial companies operating under the NBFC-AA license from the Reserve Bank of India (RBI).

"The kind of infra Setu is building will be very important for India in the years to come and I am happy that they are relentlessly moving towards that goal and this partnership with Pine Labs will help them to accelerate," said Nandan Nilekani, Co-founder and Chairman of Infosys.

This is the third acquisition announced by Pine Labs this year.

In April, Pine Labs made a significant majority investment in end-to-end payment solution provider Mosambee.

In March, it raised $50 million from Vitruvian Partners, a London-headquartered international investment firm.

In February, Pine Labs acquired Mumbai-based online payments startup Qfix for an undisclosed sum.

"Pine Labs' network of merchants and issuers coupled with our API integration prowess will help achieve great results in personal finance management, monitoring loans to predict default rates, credit underwriting, and several other areas," added Sahil Kini, Co-founder and CEO at Setu.

Incorporated in Singapore, Pine Labs' key investors include Sequoia India, Actis Capital, Temasek, PayPal and Mastercard.